Communications and Information Technology Minister has today instructed her officials to commission an independent assessment of Chorus’ financial position and its capability to deliver on its contractual commitments under the Ultra-Fast Broadband and Rural Broadband Initiatives.

Ms Adams has written to Chorus informing the company of her decision.

“In recent weeks, I have had the Ministry of Business Innovation and Employment (MBIE) work with external consultants to carry out an independent analysis of Chorus’ financial position across a range of pricing options, based on publicly-available information.

“To complement this work, I have decided to seek an independent assessment at arm’s length from the Government.

“In order to properly assess the range of options before the Government, I have directed MBIE to work with Crown Fibre Holdings to commission independent advice to the Government of Chorus’ financial position and capability to deliver on its contractual obligations with the Government.”

The review would assess the impact of the Commerce Commission’s decisions on both the Unbundled Copper Local Loop and the Unbundled Bitstream Access prices on Chorus’ ability to deliver on its contractual commitments under the Ultra-Fast Broadband and Rural Broadband Initiatives.

As part of the review, the consulting firm would be asked to assess the scope for Chorus to manage the impact within the constraints of the reduced revenue, and if required, a range of alternative options.

At the end of the review, the report would be provided directly to Ms Adams, and a copy of the report released publicly.

Once the report is received and released, the Government will consider its next steps.

Communications and Information Technology Minister Amy Adams says the Government has today received a verbal briefing from Ernst & Young Australia on its high level findings on whether Chorus can deliver on its broadband contracts.

The Ministry of Business, Innovation and Employment commissioned Ernst & Young Australia to investigate Chorus’ capability to deliver on its Ultra-fast Broadband (UFB) and Rural Broadband Initiative (RBI) contractual commitments with the Government, in light of the Commerce Commission’s decisions on final wholesale prices for copper-based broadband services.

“The preliminary conclusion from Ernst & Young is that copper price changes will have a significant impact on Chorus’ financial position and that absent further action, Chorus is at risk of not meeting its UFB and RBI contractual commitments, after taking into account a wide range of actions Chorus can take itself,” Ms Adams says.

“While the quantum of the shortfall is still being finalised and will be outlined in its final report, Ernst & Young has indicated it is unlikely to alter the high-level findings, and that the Government can act with confidence on the information Ernst & Young has supplied.

“As a result of this information, and because the Government remains strongly committed to the UFB roll-out, the Government expects that the next step will be for Chorus to approach Crown Fibre Holdings (CFH) to discuss specific provisions within the UFB contract.

“The Government supports CFH entering into discussions with Chorus to help manage this issue.

“The Government’s UFB initiative has a budget of $1.35 billion and CFH is required to act within this fiscal envelope.

“The Government expects Chorus to meet a significant part of the shortfall.

“The Government expects to know the outcome of the discussions between CFH and Chorus in a few months’ time.”

Communications and Information Technology Minister Amy Adams has today released the final report from Ernst & Young Australia on whether Chorus can deliver on its broadband contracts.

The Ministry of Business, Innovation and Employment commissioned Ernst & Young Australia to investigate Chorus’ capability to deliver on its Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) contractual commitments with the Government, in light of the Commerce Commission’s decisions on final wholesale prices for copper-based broadband services.

The independent report confirms the high level findings that were announced by the Government on 5 December.

“Copper price changes will have a significant impact on Chorus’ financial position, and the wide range of actions that Chorus can consider taking itself will not be sufficient to cover the funding shortfall to safeguard the UFB and RBI build commitments,” Ms Adams says.

“The report confirms the initial figures released by Chorus about the impact of copper price changes on its financial position, and lays to rest claims by some that the figures were overstated.”

The report finds that Chorus could reduce the estimated funding gap from $1 billion to between $200 million and $250 million by implementing a number of cash flow savings initiatives.

“The Government remains committed to the UFB and RBI programmes and now we can get on and ensure that faster broadband is rolled out to New Zealanders.”

Crown Fibre Holdings (CFH) and Chorus have now begun discussions about possible adjustments to Chorus’ UFB contracts to help close the funding gap.

The Government’s UFB initiative has a budget of $1.35 billion and CFH is required to act within this fiscal envelope.

“The Government expects Chorus to meet a significant part of the shortfall.

“The Government will be monitoring closely the progress of discussions between CFH and Chorus.”

If Chorus has bitten off more than it can chew, they should ask CFH to retender some of its areas. I reckon they should lose a big area anyway as a penalty for all the scaremongering. Pukekohe would be a prime candidate.

Qualified in business, certified in fibre, stuck in copper, have to keep going ^_^

webwat: If Chorus has bitten off more than it can chew, they should ask CFH to retender some of its areas. I reckon they should lose a big area anyway as a penalty for all the scaremongering. Pukekohe would be a prime candidate.

i agree, maybe if they paid their executives less too that could help.

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